I do not believe that server location is a big factor for rankings because many hosting sites only provide servers on the same location. For example, one of my sites gets a lot of traffic from India and it is hosted in USA.

you just have to gather some relevant links and promote your site internationally.. it doesn't matter the where the site is located, besides you can still get traffic internationally even if you don't target it as long your site is index by google..

However, traffic will be depending on the content and its target. If you want to target the international traffic then do optimize your website with the international targeting (i.e. create the content which is off interesting to the international users)

I did a search for relevant sites that are in the desired country on a linking site like link2me.com ot linkdirectory.com and then emailed the link request through these sites. It has worked really well

The sites allow me to link to other sites in the same field as my website which are classed as relevant by Google and its Panda friend. I also recieve dofollow links from these sites to invite traffic to my website

I understand that server location is a big factor for search engines when they decide how high you should rank in search results for a specific country.

It is only a factor if there is nothing else to go on. You can set your geo target country in Webmaster Tools, and Google also looks for such things as addresses and phone numbers to help it decide which country you are aiming at.
I am in Turkey, my server is in the US and my target country is the UK. I get higher SERPS for the UK than the US.

Google places a lot of weight on local search and therefore results are filtered by the geographic location of the host servers. If you use a country-code TLD, the server location may not matter, as SEs will base your geo-location on your website’s country-specific domain name.

There are several ways to get traffic, if you are following a specific country for traffic then local directories will help you out to be in SERP's. Another way use Yahoo Answers, SMO part will really help you in getting a good amount of traffic. I am personally using yahoo answers and facebook for getting referral traffic every day.
_________________
[fake signature was right here]

It actually depends on your target, and not on the location of the server. Well, it could be the location of the server, but the only scenario I can think of is that your target is where the server is. There could be other factors.

If you want international traffic, you should share your content in places where your target hangs out.

yes server location is one of the biggest factor that's why you have a much better ranking on UK than US.

But the OP said:

Quote:

Originally Posted by nightmist

The funny thing is I am getting more traffic from country where I am based but not the country of the server (US)

To the OP:
Do you actually want to rank higher in the UK, or is your question just about why you are ranking as you do?
If you do want better UK ranking, one suggestion is that you have a proper contact page giving a UK address and phone number rather than your "contact us" button being a link to send an email. Also you could show prices as GBP by default, with the option for visitors to view in other currencies. These are the type of signals Google uses to determine where it is you want to mainly target.
As has already been mentioned, links from UK based sites would help as well.

In my view it all depends on the content targeting to the country/who are interested in it. I don't believe that if google treat based on a server location.

Well actually Google does consider it. If the server IP is located in a particular country, Google does use that as an indicator that it is the target country. But it isn't the only factor, so that by using ccTLD's or geo targeting and the other things already mentioned, you can let them know you are targeting a different country. It is explained better in this short video:

But if there are no other factors to go on Google will consider the location of server to be the same as the target location.